Strong demand for bricks from the housebuilding sector pushed profits higher at Forterra (FORT) in the year to December 2018. Higher operating costs, notably energy and fuel, were more than offset by price increases applied across the range of products. However, cash margins dipped from 22.8 per cent to 21.4 per cent after a disappointing performance from the acquired Bison Precast business. Initial problems have now been solved, and will allow Forterra to expand its own previously capacity-constrained precast output. The cost of buying Bison was also significantly lower than building a new facility from scratch.
Brick production grew by 13 per cent, with capacity increased by 10m following the completion of its investment programme at the Accrington facility. And although around three years away, a new brick factory costing £95m will replace an existing facility and boost production there from 85m to 180m bricks, effectively increasing total output by 16 per cent.
Analysts at Peel Hunt are forecasting adjusted 2019 pre-tax profits of £68m and EPS of 27.2p, up from £64.8m and 26.1p in 2018.
| FORTERRA (FORT) | ||||
| ORD PRICE: | 289.5p | MARKET VALUE: | £580m | |
| TOUCH: | 288-289.5p | 12-MONTH HIGH: | 340p | LOW: 207p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 67p | NET DEBT | 29% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014* | 268 | 33 | na | nil |
| 2015* | 290 | 22.2 | na | nil |
| 2016 | 295 | 37 | 13.8 | 5.8 |
| 2017 | 331 | 59.3 | 23.8 | 9.5 |
| 2018 | 368 | 64.8 | 26.5 | 10.5 |
| % change | +11 | +9 | +11 | +11 |
| Ex-div: | 13 Jun | |||
| Payment: | 4 Jul |
*Pre-IPO figures
